Pretense Of Knowledge

Fed fears risks posed by exit tools; plan almost done

"The sheer magnitude of the amounts of money used to combat the crisis - $2.6 trillion sitting at the Fed as bank reserves and $4.2 trillion held by the Fed in various securities - may complicate the U.S. central bank's ability to control its target interest rate once the decision is made that it should be raised. The Fed has neared consensus that its workhorse tool will be the interest it pays banks on excess reserves on deposit at the Fed. Another tool would have a similar impact but apply more broadly, using overnight repurchase agreements that would let money market funds and other institutions as well as banks essentially make short-term deposits at the Fed." Continue reading →

Continue ReadingFed fears risks posed by exit tools; plan almost done

Japan economics minister warns of premature QE exit

"Japanese Economics Minister Akira Amari warned that it would be premature for the Bank of Japan to consider an exit strategy from its massive stimulus programme, voicing hope instead for further monetary easing if achievement of its inflation goal falls behind schedule. The central bank has kept policy unchanged since deploying an intense burst of monetary stimulus in April last year, when it pledged to double base money via aggressive asset purchases to accelerate inflation to 2 percent in roughly two years. With Japan only halfway to meeting that target, the BOJ is set to keep its stimulus plan intact well into next year." Continue reading →

Continue ReadingJapan economics minister warns of premature QE exit

Yellen Sees Little Threat to Financial Stability

"Federal Reserve Chair Janet Yellen said Wednesday that she doesn't see a need for the Fed to start raising interest rates to defuse the risk that extremely low rates could destabilize the financial system. Yellen said she does see 'pockets' of increased risk-taking. But she said those threats could be addressed through greater use of regulatory tools, such as higher capital standards for banks. Some critics of Fed policies have warned that the central bank could be setting the stage for another dangerous bubble by keeping rates so low for so long. In her speech, Yellen said she didn't see dangerous excesses in the financial system." Continue reading →

Continue ReadingYellen Sees Little Threat to Financial Stability

Fed Prepares to Maintain Record Balance Sheet for Years

"Federal Reserve officials, concerned that selling bonds from their $4.3 trillion portfolio could crush the U.S. recovery, are preparing to keep their balance sheet close to record levels for years. Central bankers are stepping back from a three-year-old strategy for an exit from the unprecedented easing they deployed to battle the worst recession since the Great Depression. The Fed is testing new tools that would allow it to keep a large balance sheet even after it raises short-term interest rates, a step policy makers anticipate taking next year. They would use these tools to drain excess reserves temporarily from the banking system." Continue reading →

Continue ReadingFed Prepares to Maintain Record Balance Sheet for Years

New York Fed Massively Disagrees With DOE’s Student Loan Default Data

"How high those delinquencies rates actually are, though, is an open question, which is turning into confusion on how to fix the problem. The most dire assessment is that one in three borrowers trying to repay student loans was late by 90 days or more at the end of 2012, according to The Federal Reserve Bank of New York in April. The U.S. Department of Education only publishes default statistics, and the official number of borrowers who default within two years of entering repayment is currently 10 percent. The default rate after three years is 14.7 percent. The default rates have been widely criticized for not giving an accurate picture of the number of student loan borrowers in distress." Continue reading →

Continue ReadingNew York Fed Massively Disagrees With DOE’s Student Loan Default Data

Lew Rockwell: Speaking Truth to Monetary Power

"We have every reason to expect governments to exploit their positions as monopolists of the production of money in ways that increase their power and benefit favored constituencies. We do not need 'monetary policy' any more than we need a paintbrush policy, a baseball bat policy, or an automobile policy. We do not need a monopoly institution to create money for us. Money, like any good, is better produced on the market within the nexus of economic calculation. Money creation by government or its privileged central bank yields us business cycles, monetary debasement, and an increase in the power of government." Continue reading →

Continue ReadingLew Rockwell: Speaking Truth to Monetary Power

Hawks Take Flight: Why the Fed’s Hypocritical Dialectic Continues

"The Fed's monetary expansion ended in 1929. The 1950s equity rise ended with a bust in the early 1960s. The Nifty Fifty fad ended with the Crash of 1969. The market recovery of the 1970s ended in 1982. The next crash was in 1987. In 1994, an expansion gave way to a recession. A great tech expansion turned sour in 2001. A housing bubble deflated violently in 2008, not just in the US but around the world. And that is where we are now. This expansion has been driven relentlessly upward for some five-plus years. Another year or two and this latest 'Wall Street Party' will be finished. We anticipate a downturn that will be as violent or even more so than 2008." Continue reading →

Continue ReadingHawks Take Flight: Why the Fed’s Hypocritical Dialectic Continues

The Successor to Keynes

"The words, 'Brilliant!' 'Ground-breaking!' and 'Visionary!' He recommends: Uniform global taxation; Confiscatory tax on inherited wealth; 15% tax on capital; 80% tax on annual incomes over US$500,000; Enforced transparency on all bank transactions; Overt use of inflation to redistribute wealth downwards. Why didn’t anyone else think o"The words, 'Brilliant!' 'Ground-breaking!' and 'Visionary!' will no doubt be seen in many reviews of Mr. Piketty’s book. He recommends: Uniform global taxation; Confiscatory tax on inherited wealth; 15% tax on capital; 80% tax on annual incomes over US$500,000; Enforced transparency on all bank transactions; Overt use of inflation to redistribute wealth downwards. Why didn’t anyone else think of this brilliant plan? Well actually, they did. In fact, the above is essentially the shopping list of the IMF, the EU, the OECD and, in fact, many of the governments that make up what was formerly described as 'the free world.'" this brilliant plan? Well actually, they did. In fact, the above is essentially the shopping list of the IMF, the EU, the OECD and, in fact, many of the governments that make up what was formerly described as 'the free world.'" Continue reading →

Continue ReadingThe Successor to Keynes

Bank of Israel’s Fischer, Treasury’s Brainard to push for more activist Fed

"The arrival of former Bank of Israel Governor Stanley Fischer and former U.S. Treasury official Lael Brainard will add two strong voices to back Chair Janet Yellen's view that loose monetary policy needs to be extended to turn around a slack labor market. Fischer intervened directly in Israel's mortgage market to tackle a real estate bubble, while Brainard pushed EU governments hard for more aggressive action from the European Central Bank during the euro zone crisis. Interviews with former colleagues and a review of their public statements also suggest both will want the Fed to remain in activist mode long after its current programs wind down and its bloated balance sheet shrinks." Continue reading →

Continue ReadingBank of Israel’s Fischer, Treasury’s Brainard to push for more activist Fed

Yellen tells graduates: Show grit like Ben Bernanke

"Federal Reserve Chairwoman Janet Yellen on Wednesday delivered what you’d expect from a commencement speech: graduates, she said, should 'tend the fires of curiosity,' listen to others, and show grit in the face of failure. Yellen reminded New York University students in Yankee Stadium that even Babe Ruth, Lou Gehrig and Joe DiMaggio failed most of the time they stepped to the plate, according to a text of her remarks. And what example did Yellen find for such an inspirational beacon of bravery? Why, her predecessor, Ben Bernanke." Continue reading →

Continue ReadingYellen tells graduates: Show grit like Ben Bernanke